Securities Market Law, Legislation and Regulation

Federal laws that have applied to the U.S. Securities Market.

In the United States, the Code of Federal Regulations (CFR) is the codification of the general and permanent rules, and notices of proposed rulemaking, published in the Federal Register by the executive departments and agencies of the Federal Government. It is divided into 50 titles that represent broad areas subject to Federal regulation. CFR 17 (or Title 17) regulates Commodity and Securities Exchanges. U.S.C. means United States Code, which is the codification of the actual Act or law. U.S. Code Title 15, Chapter 2A and 2B (USC 15, ch. 2A & 2B) regulate Securities and Securities Exchanges. The relationship between the two is that the U.S.C. is the law that requires or mandates the regulation and the CFR is the description on how the regulations should be carried out by the authorities. However, the U.S.C. Title and the CFR Title do not always correlate.   www.access.gpo.gov/uscode/title15/chapter2a_.html   (USC 15, ch. 2A)   www.access.gpo.gov/uscode/title15/chapter2b_.html   (USC 15, ch. 2B)

Uniform Securities Act of 1930 (as amended 1956; as amended 1988; as amended 2002)

Provides the basic model of all U.S. state securities laws although there is no uniformity between the respective states.

www.uniformsecuritiesact.org/

Securities Act of 1933 (15 U.S.C. § 77a et seq.)

Stipulates that An offering of securities must be registered under this Act and applicable state securities laws.

Section 18(b)(3) created a category of covered securities for offers and sales of securities made to qualified purchasers.

Banking Act of 1933 / Glass-Steagall Act (P.L. 73-66, 48 Stat. 162; 16 June 1933).

In the wake of the crash of the stock market, it separated commercial and investment banking (except for U.S. government obligations) as a way to reduce risk in the future.

Established a limitation on commercial banks to purchase securities for their own account.

Prohibits investment bank performing commercial bank operations.

Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.)

Resulted in the creation of the Securities and Exchange Commission (SEC) and authorized the newly created entity to regulate the securities industry (brokerage firms, transfer agents, clearing agencies and the various stock exchanges).

SEC Rule 10b-5 prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security, including insider trading.

Rule 17a-4 requires that broker-dealers must retain certain records for specific corresponding periods of varying length.

Investment Company Act of 1940 (15 U.S.C. § 80a-1 through 15 U.S.C. § 80a-64; as amended in 1996)

Was designed for the registration (with the SEC) and regulation of investment companies and investment advisers, open-end mutual funds and unit investment trusts that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public.

Investment Advisers Act of 1940 (15 U.S.C. § 80b-1 through 15 U.S.C. § 80b-21; as amended in 1996)

Stipulates that advisers who have at least $25 million of assets under management or advise a registered investment company must register with the SEC.

Internal Revenue Code of 1986

Granted pass-through tax treatment to mutual funds as long as the fund adheres to certain operational requirements.

Gramm-Leach-Bliley Act of 1991

Essentially overturned the Glass-Steagall Act of 1933. Under the Gramm-Leach-Bliley Act, bank holding companies meeting certain eligibility criteria may elect to become "financial holding companies," which allows them to an offer expanded list of financial services that includes insurance policy sales, securities underwriting and dealing, merchant banking, investment advisory and lending activities.

Private Securities Litigation Reform Act of 1995 (PSLRA) (15 U.S.C. § 78u–4)

Allows judges to decide the most adequate lead plaintiff in class action suits.

Mandates full disclosure to investors of proposed settlements, including the amount of attorneys' fees.

Prohibits bonus payments to favored plaintiffs.

Permits judges to scrutinize lawyer conflicts of interest.

National Securities Markets Improvement Act of 1996 (NSMIA)

amended the Investment Company Act of 1940 and and the Investment Advisers Act of 1940 and separated the roles of federal and state regulators with respect to certain securities and the regulation of both broker-dealers and investment advisers (states have no jurisdiction over offers and sales of mutual funds, securities traded on national exchanges or market systems known as "covered" securities). While there are still some state regulations that must be complied with, NSMIA essentially limited the ability of the states to review, limit or otherwise restrict the sale of most securities.

Securities Litigation Uniform Standards Act of 1998 (SLUSA)

Amended portions of the Securities Act of 1933 and the Securities Exchange Act of 1934 to preempt certain class actions that alleged fraud under state law "in connection with the purchase or sale" of securities. Such lawsuits are therefore barred from being filed in state courts, or from being brought in federal court under state law.

Investor and Capital Markets Fee Relief Act (15 U.S.C. 78; Public Law 107-123)

Amends the Securities Exchange Act of 1934 to reduce mandatory transaction fees (by changing from a percentage to a flat dollar amount) with respect to: (1) exchange-traded securities transactions (including off-exchange trades of exchange-registered and last-sale-reported securities) from 1/300th of one percent to $15 per million of the dollar amount of securities transacted; and (2) stock repurchase statements and proxy solicitations and statements in corporate control transactions from 1/50th of one percent to $125 per million of the value of the transaction. Reduces assessments for security futures transactions from $0.02 to $0.009 per round turn transaction (for 2007 and after, from $0.0075 to $0.0042 per round turn transaction). substantially reduced the filing and securities transaction fees paid by the industry to its regulator, the Securities and Exchange Commission (SEC).
frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ123.107.pdf

Blue Sky Laws

State securites acts / regulations are known as Blue Sky laws which vary from state to state. Each state has a regulatory agency which administers the respective laws with regard to the registration of securities offerings and the registration of brokerage firms and individual brokers. Before a security is allowed to be bought or sold in any given state, there must be a registration (or an exemption from registration requirements) in place to cover that transaction. Furthermore, the brokerage firm and the individual representative must be either registered in the state, or exempt from the registration requirements.

U.S. and International Securities Markets Supervision and Regulation

U.S. congress

House Financial Services Committee   financialservices.house.gov/

U.S. Senate Committee on Banking, Housing, and Urban Affairs   banking.senate.gov/

Securities and Exchange Commission (SEC)

Investment advisers and investment adviser representatives are electronically registerd with the Investment Adviser Registration Depository (IARD) and can be searched through the SEC Investment Adviser Public Disclosure (IAPD)   www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_OrgSearch.aspx

SEC Proposed Rules   www.sec.gov/rules/proposed.shtml

The SEC also requires that publicly traded corporations file various types of financial reports:

8K is a mandatory current report filing.

10K is a mandatory annual financial statements filing must be filed within 75 days of the end of the fiscal year.

10Q is a mandatory quarterly financial statements filing.

13D must be filed within 10 days of any entity obtaining control of 5% or more of a company's securities.

18K is a mandatory annual financial statements filing for foreign governments and political subdivisions.

20F is an optional annual financial statements filing for foreign corporations.

These documents can be located online at EDGAR (the SEC's Electronic Data Gathering, Analysis and Retrieval system)
www.sec.gov/edgar.shtml

Financial Industry Regulatory Authority (FINRA)

The Financial Industry Regulatory Authority (FINRA) was created through the consolidation of NASD (National Association of Securities Dealers) and the member regulation,enforcement, and arbitration functions of the New York Stock Exchange. FINRA is the largest non-governmental, private-sector regulator (SRO / self-regulating organizations) for all securities firms doing business in the United States. All told, FINRA oversees nearly 5,100 brokerage firms, about 173,000 branch offices and more than 676,000 registered securities representatives. Created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA is involved in virtually every aspect of the securities business—from registering and educating industry participants to examining securities firms; writing rules; enforcing those rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms. It also performs market regulation under contract for The NASDAQ Stock Market, the American Stock Exchange (NYSE Amex), the International Securities Exchange and the Chicago Climate Exchange.

Broker-dealers and their representatives are electronically registered with the SEC through the Central Registration Depository (CRD), which can be searched through the FINRA Look Up a Securities Firm or Broker in BrokerCheck   www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm

FINRA and the North American Securities Administrators Association (NASSA) also have oversight for the testing and licensing of employees in various sectors of the securities industry.

Series 3 / National Commodity Futures

Series 4 / Registered Options Principal

Series 6 / Investment Company and Variable Contracts Products Representative

Series 7 / General Securities Registered Representative

Series 9 / General Securities Sales Supervisor

Series 10 / General Securities Sales Supervisor

Series 11 / Assistant Representative - Order Processing

Series 15 / Foreign Currency Options

Series 22 / Direct Participation Programs Limited Representative

Series 63 / Uniform Securities Agent State Law

Series 65 / Uniform Investment Adviser Law

Series 66 / Uniform Combined State Law

NYSE Regulation, Inc.

The NYSE Regulation, Inc., is a not-for-profit corporation (subsidiary of NYSE Euronext) and consists of three divisions:

Intermarket Surveillance Group (ISG)

The Intermarket Surveillance Group (ISG) was formed in 1983 and consists of several North American, Asian, and European exchanges that work together to coordinate market regulation. In the United States includes the SRO American Stock Exchange LLC (AMEX), Boston Stock Exchange, Inc. (BSE), Chicago Board Options Exchange, Inc. (CBOE), Chicago Stock Exchange, Inc. (CHX), International Securities Exchange (ISE), NASD Inc. (NASD), The Nasdaq Stock Market LLC (NASDAQ), National Stock Exchange (NSX), New York Stock Exchange, Inc. (NYSE), NYSE Arca, Inc. (NYSEArca) and Philadelphia Stock Exchange, Inc. (PHLX).

IOSCO (International Organization of Securities Commissions)

The International Organization of Securities Commissions (IOSCO) consists of the national securities regulatory agency of each respective member nation and the group cooperates together to develop principles and standards in the area of securities regulation.

SIPC (Securities Investor Protection Corporation)

SIPC (Securities Investor Protection Corporation) was chartered by Congress to restore funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. When a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing, SIPC steps in as quickly as possible and, within certain limits, works to return customers' cash, stock and other securities. Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever or wait for years while their assets are tied up in court. Although not every investor is protected by SIPC, no fewer than 99% of persons who are eligible get their investments back from SIPC. SPIC will cover investor losses of up to a maximum $100,000 in cash accounts and of up to maximum $500,000 in securities.

SIPC protects customers of broker- dealers as long as the broker-dealer is a SIPC member. However, if a SIPC member's registration with the U.S. Securities and Exchange Commission is terminated, the broker-dealer's SIPC membership is also automatically terminated. SIPC loses its power to protect customers of former SIPC members 180 days after the broker-dealer ceases to be a member of SIPC. Normally, the SEC will not permit the termination of the registration and SIPC membership of a broker-dealer if the firm owes securities or cash to customers. However, a SIPC membership may be terminated if the Commission is unaware the firm owes securities or cash to customers. In filing a claim, an investor usually has to describe in the claim form the cash and securities that are owed to the investor. The court-appointed trustee will compare what the claim against the books and records of the brokerage firm.

SIPC (Securities Investor Protection Corporation)   www.sipc.org/

U.S. States Securities Regulation

Alabama Securities Commission (ASC)   asc.alabama.gov/

Alaska Department of Commerce, Community and Economic Development, Division of Banking and Securities   www.commerce.state.ak.us/

Arizona Corporation Commission, Securities Division   www.azcc.gov/divisions/securities/

Arkansas Securities Department   www.securities.arkansas.gov/

California Department of Corporations   www.corp.ca.gov/

Colorado Department of Regulatory Agencies, Division of Securities   www.dora.state.co.us/securities/

Connecticut Department of Banking, Securities and Business Investments Division   www.ct.gov/dob/cwp/view.asp?a=2249&q=299158&dobNAV_GID=1662

Delaware Department of Justice, Division of Securities   attorneygeneral.delaware.gov/consumers/investmented/

District of Columbia, Department of Insurance, Securities and Banking   disb.dc.gov/

Florida Office of Financial Regulation   www.flofr.com/

Georgia Secretary of State, Securities Division   sos.georgia.gov/securities/default.htm

Hawaii Department of Commerce & Consumer Affairs, Securities Branch   hawaii.gov/dcca/areas/sec

Idaho Department of Finance, Securities Bureau   finance.idaho.gov/SecuritiesBureau.aspx

Illinois Office of the Secretary of State, Securities Department   www.cyberdriveillinois.com/departments/securities/home.html

Indiana Secretary of State, Securities Division   www.in.gov/sos/securities/

Iowa Insurance Division, Securities & Regulated Industries Bureau   www.iid.state.ia.us/ia_securities_bureau/index.asp

Kansas Office of the Kansas Securities Commissioner   www.securities.state.ks.us/home.html

Kentucky Office of Financial Institutions, Division of Securities  

Louisiana Office of Financial Institutions, Securities Division   www.ofi.state.la.us/securit.htm

Maine Department of Professional & Financial Regulation, Office of securities   www.maine.gov/pfr/securities/index.shtml

Maryland Attorney General, Securities Division   www.oag.state.md.us/Securities/index.htm

Massachusetts Secretary of the Commonwealth, Securities Division   www.sec.state.ma.us/sct/sctidx.htm

Michigan Department of Labor & Economic Growth, Office of Financial and Insurance Services   www.michigan.gov/dleg

Minnesota Department Of Commerce, Division of Securities   www.state.mn.us/portal/mn/jsp/content.do?subchannel=-536881759&id=-536881351&agency=Commerce

Mississippi Secretary of State, Securities Regulation & Enforcement   www.sos.state.ms.us/regenf/securities/securities.asp

Missouri Secretary of State, Securities Division   www.sos.mo.gov/securities/

Montana State Auditor's Office, Securities Department   sao.state.mt.us/securities/index.asp

Nebraska Department of Banking & Finance, Bureau of Securities   www.ndbf.org/securities/index.shtml

Nevada Secretary of State, Securities Center   www.sos.state.nv.us/securities/

New Hampshire Securities Regulation   www.sos.nh.gov/securities/

New Jersey Office of the Attorney General, Division of Consumer Affairs, Bureau of Securities   www.njsecurities.gov/

New Mexico Regulation and Licensing Department, Securities Division   www.rld.state.nm.us/Securities/index.html

New York Attorney General, Investor Protection Bureau   www.oag.state.ny.us/investors/investors.html

North Carolina Department of the Secretary of State, Securities Division   www.secretary.state.nc.us/sec/

North Dakota Securities Department   www.ndsecurities.com/department-info/default.asp

Ohio Department of Commerce, Division of Securities   www.com.ohio.gov/secu/

Oklahoma Securities Commission, Department of Securities   www.securities.ok.gov/

Oregon Division of Finance and Corporate Securities (DFCS)   www.cbs.state.or.us/external/dfcs/

Pennsylvania Securities commission   www.psc.state.pa.us/

Puerto Rico Office of the Commissioner of Financial Institutions, Securities   www.cif.gov.pr/valores_eng.html

Rhode Island Department of Business Regulation, Division of Banking & Securities Regulation   www.dbr.state.ri.us/divisions/banking_securities/securities.php

South Carolina Attorney General, Securities Division   www.scattorneygeneral.com//securities/index.html

South Dakota Department of Revenue & Regulation, Division of Securities   www.state.sd.us/drr2/reg/securities/

Tennessee Department of Commerce & Insurance, Securities Division   www.state.tn.us/commerce/securities/

Texas State Securities Board   www.ssb.state.tx.us/

Utah Division of Securities   www.securities.state.ut.us/

Vermont Department of Banking, Insurance, Securities & Health Care Administration (BISHCA), Securities Division   www.bishca.state.vt.us/SecuritiesDiv/securindex.htm

Virginia Securities & Retail Franchising Division   www.scc.virginia.gov/division/srf/webpages/homepage.htm

Washington Department of Financial Institutions, Division of Securities   www.dfi.wa.gov/sd/

West Virginia State Auditor's Office, Securities Commission   www.wvsao.gov/securities/securities.asp

Wisconsin Department of Financial Institutions, Division of securities   www.wdfi.org/fi/securities/

Wyoming Secretary of State, Securities Division   soswy.state.wy.us/securiti/securiti.htm

Canada Provinicial Securities Regulation

Alberta Securities Commission   www.albertasecurities.com/

Autorité des Marchés Financiers (AMF) (Québec)   www.lautorite.qc.ca/   (Français / English)

British Columbia Securities Commission   www.bcsc.bc.ca/

Canada Investor protection Fund / Fonds canadien de protection des épargnants   www.cipf.ca/

Canadian Investor Protection Fund (CIPF)   www.cipf.ca/   (Français / English)

Canadian Securities Administrators (CSA)   www.csa-acvm.ca/   (Français / English)

Financial Services Commission of Ontario (Canada)   www.fsco.gov.on.ca/

Manitoba Securities Commission   www.msc.gov.mb.ca/   (Français / English)

New Brunswick Securities Commission   www.nbsc-cvmnb.ca/nbsc/   (Français / English)

Newfoundland and Labrador, Government Services, Financial Services Regulation Division   www.gs.gov.nl.ca/cca/fsr/

Northwest Territories, Department of Justice, Registrar of Securities   www.justice.gov.nt.ca/securitiesregistry/

Nova Scotia Securities Commission   www.gov.ns.ca/nssc/

Ontario Securities Commission   www.osc.gov.on.ca/

Prince Edward Island Securities Office   www.gov.pe.ca/securities/

Saskatchewan Securities Commission   www.sfsc.gov.sk.ca/

Non-U.S. Securities Regulation

Argentina - Comisión Nacional de Valores   www.cnv.gov.ar/

Australia - Securities & Investment Commisssion (ASIC)   www.asic.gov.au/

Austria - Finanzmarktaufsicht (Financial Market Authority)   www.fma.gv.at/

Bahamas - Securities Commission   www.scb.gov.bs/

Bangladesh - Securities & Exchange Commission   www.secbd.org/

Belgium - Commission Bancaire, Financière et des Assurances (CBFA)   http://www.cbfa.be/   (Nederlands / Français / English)

Bolivia - Superintendencia de Pensiones, Valores y Seguros   www.spvs.gov.bo/

Brazil - Comissão de Valores Mobiliários   www.cvm.gov.br/

Bulgaria - Financial Supervision Commission   www.fsc.bg/

Chile - Superintendencia de Valores y Seguros   www.svs.cl/

Colombia - Superintendencia Financiera   www.superfinanciera.gov.co/

Costa Rica - Superintendencia Genereral de Valores   www.sugeval.fi.cr/

Croatia - Hrvatska agencija za nadzor financijskih usluga (HANFA)   www.hanfa.hr/

Cyprus Securities & Exchange Commission   www.cysec.gov.cy/default_gr.aspx

Czech Republic - Czech National Bank   www.cnb.cz/

Denmark - Finanstilsynet (Financial Supervisory Authority)   www.ftnet.dk/

Dominican Republic - Superintendencia de Valores   www.siv.gov.do/

Ecuador - Superintendencia de Compañías   www.supercias.gov.ec/

El Salvador - Superintendencia de Valores   www.superval.gob.sv/

Estonia - Finantsinspektsioon (Financial Supervision Authority)   www.fi.ee/

Finland - Rahoitustarkastus (Financial Supervision Authority)   www.rahoitustarkastus.fi/

France - Autorité des Marchés Financiers   www.amf-france.org/   (Français / English)

Germany - Bundesanstalt für Finanzdienstleistungsaufsicht   http://www.bafin.de/

Gibraltar - Financial Services Commission   www.fsc.gi/

Greece - Capital Market Commission   www.hcmc.gr/

Honduras - Comisión Nacional de Bancos y Seguros   www.cnbs.gov.hn/

Hungary - Pénzügyi Szervezetek Allami Felügyelete (PSZAF)   www.pszaf.hu/

India - Securities and Exchange Board   www.sebi.gov.in/

Ireland - Financial Services Regulatory Authority   www.ifsra.ie/

Israel - Securities Authority   www.isa.gov.il/   (Hebrew / English)

Italy - Commissione Nazionale per le Società e la Borsa (CONSOB)   www.consob.it/

Jamaica - Financial Services Commission (FSC)   www.fscjamaica.org/

Jordan - Securities Commission   http://www.jsc.gov.jo/   (Arabic / English)

Kazahstan - Agency on Regulation and Supervision of the Financial Market and Financial Organizations   www.afn.kz/

Lithuania - Lietuvos Respublikos vertybiniu popieriu komisija (Securities Commission)   www.lsc.lt/

Luxembourg - Commission de Surveillance du Secteur Financier (CSSF)   www.cssf.lu/

Malta - Financial Services Authority   http://www.mfsa.com.mt/

Mexico - Comisión Nacional Bancaria y de Valores (CNBV)   www.cnbv.gob.mx/

Montenegro - Securities commission   www.scmn.cg.yu/

Netherlands - Autoriteit Financiële Markten (AFM)   www.afm.nl/

New Zealand Securities Commission   www.seccom.govt.nz/

Norway - Kredittilsynet   www.kredittilsynet.no/

Panama - Comisión Nacional de Valores (National Securities Commission)   www.conaval.gob.pa/

Peru - Comisión Nacional Supervisora de Empresas y Valores (CONASEV)   www.conasev.gob.pe/

Poland - Komisja Nadzoru Finansowego   www.kpwig.gov.pl/

Portugal - Comissão do Mercado de Valores Mobiliários (CMVM)  

Romania - Comisia Nationala a Valorilor Mobiliare (CNVM)   www.cnvmr.ro/

Serbia - Komisija za hartije od vrednosti   www.sec.sr.gov.yu/

Slovakia - National Bank of Slovakia   www.uft.sk/

Slovenia - Agencija za trg vrednostnih papirjev (Securities Market Agency)   www.a-tvp.si/

Spain - Comisión Nacional del Mercado de Valores (CNMV)   www.cnmv.es/

Sweden - Finansinspektionen (Financial Supervisory Authority)   www.fi.se/

Trinidad & Tobago - Securities & Exchange Commission (TTSEC)   www.ttsec.org.tt/

Turkey - Capital Markets Board   www.cmb.gov.tr/

Ukraine - Securities and Stock Market State Commission   www.ssmsc.gov.ua/

United Kingdom - Financial Services Authority (FSA)   www.fsa.gov.uk/